New York dry bulk investment fund launches

New York dry bulk investment fund launches

Yesterday saw the launch in New York of the first freight futures exchange-traded fund focusing exclusively on dry bulk shipping.

The Breakwave Dry Bulk Shipping ETF has been created by Breakwave Advisors and ETF Managers Group (ETFMG).

The fund, called BDRY for short, provides long exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. This offers investors exposure to dry bulk freight without the need for a futures trading account. BDRY is designed to reduce the effects of rolling contracts by using a laddered strategy to buy contracts while letting existing positions expire and settle in cash.

“We are thrilled to bring such an innovative product to the market, allowing investors to participate directly in the exciting world of dry bulk shipping” said John Kartsonas, founder and managing partner of Breakwave Advisors. “Freight futures have historically exhibited strong cyclical returns, but for most investors it has been a very hard-to-access market. For the first time, through BDRY, a wide range of market participants can now directly access the dry bulk market using a simple, transparent, equity-like investment product.”

The fund will hold freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures, based on the prevailing calendar schedule. The fund intends to progressively increase its position to the next calendar quarter three-month strip while existing positions are maintained and settle in cash. The initial freight futures allocation will be 50% capesize contracts, 40% panamax contracts and 10% supramax contracts, rebalancing annually.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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